COLUMBUS, Ohio - Two Republican legislators have been hosting meetings for months aimed at moving Ohio to a uniform municipal tax structure.

They want to streamline the system to aid businesses that find it difficult navigating Ohio's mishmash of municipal tax rules and definitions that differ from one jurisdiction to the next.

The idea was first floated last year by Gov. John Kasich and included a proposal for the state to assume collection of all the local taxes. But mayors and city managers immediately batted down the idea, accusing the Republican leader of attempting a takeover of a major source of local revenue -- and so soon after Kasich's first budget that sharply reduced state aid to local governments.

Rep. Cheryl Grossman, of suburban Columbus, said she will produce a bill early next year that will not include the central collection idea but will strive for uniformity in local tax rules.

"I've had numerous conversations with businesses, and they just roll their eyes, saying, 'you have no idea the amount of time it takes our company to comply,'" said Grossman, who added the issue is one of the top reasons businesses give for declining to move to Ohio.

Local government leaders say they generally agree that Ohio needs a uniform income tax code and that dropping the state collection piece was an important step. But they have other major concerns.

"There are a lot of big-dollar things that they are talking about changing in the guise of uniformity that will cost our communities a significant amount of revenue," said Kent Scarrett, a lobbyist for the Ohio Municipal League.

Still, both sides agree that the current municipal income tax system is arduous and calls for uniformity but disagree, at this point, on what uniformity looks like.

State tax commissioner Joe Testa supports efforts by Grossman and Rep. Peter Beck, of Springfield, to streamline the municipal tax system, saying that failing to do so will stifle efforts at job creation and retention.

"Our municipal income tax system is arguably the most complex, the most burdensome in the country," Testa told The Plain Dealer. "It is a problem."

Grossman said it is typical for a plumber, for example, who makes house calls in 10 cities to have to file municipal income tax forms to each. It usually requires hiring a certified public accountant just to be certain that the taxpayer is adhering to each local government's set of rules.

Her idea is to create a single tax form that a company fills out one time and then sends to each municipality where it has done work over the past calendar year, as opposed to filling out separate forms for each.

The municipality would still bill the taxpayer and make its own arrangements to collect payment.

And while each municipality would still be able to charge the income tax rate the local voters have chosen, there would be a single definition for what qualifies as income and one set of rules for penalties and other guidelines. But those details still haven't been addressed and figure to be problematic, according to the Ohio Municipal League.

Grossman said she is not working with the governor's office on her proposal. But the Kasich administration has said it will have a state tax reform proposal early next year, the crux of which is likely to be an individual income tax cut that Kasich hopes will be paid for by an oil and gas severance tax that his fellow Republicans in the Ohio House, like Grossman, have not yet supported.

The governor still favors a uniform municipal income tax code that encourages sharing of services but not necessarily consolidation of small governments and is actively studying the issue. But the administration would not say whether it would offer a competing proposal to Grossman's.

Grossman has worked closely with the Ohio Society of CPAs, which is leading a coalition of 19 organizations that includes the Ohio Chamber of Commerce, several big-city local chambers, and groups representing restaurants, realtors, insurance companies, doctors, truckers and builders.

Amy Mignogna, director of tax policy for the CPA organization, builds on Grossman's example of the plumber to show why Ohio must reform its system.

"They are forced to hire somebody to figure out for that one day that they are in 10 different cities, what are the rates, definitions of income, rules and regulations for each," Mignogna said. "That's an economic development burden for Ohio."

Mignogna said Ohio is one of only 10 states that assess local income taxes on individuals and businesses. And of those 10, only one, Pennsylvania, has more individual locales for taxpayers to deal with. Ohio has about 550 municipalities and villages.

John Licastro, mayor of Bratenahl and budget committee chairman for the Cuyahoga County Mayors and Managers Association, said local leaders agree with state officials that the system needs to be updated. But Licastro, who has taken part in meetings with Grossman and Beck, said legislators still haven't tackled the toughest issues.

"We are at the table and discussing this. But what we have discussed is the low-hanging fruit, like uniformity of forms, uniformity in collection dates," Licastro said. "Other issues, such as a redefinition of what is taxable income, have not been discussed, and that really is the brunt of this issue that could have a major impact."

Licastro noted that the last state budget cut state aid to local governments by 50 percent. He also noted that the Ohio estate tax will be phased out at the end of 2013, which is also a major source of local revenue that will disappear.

He said until Grossman's plan defines taxable income, millions more dollars for local governments remain at stake.

"That's the discussion we're anxious to have," he said.

Scarrett, from the Ohio Municipal League, said his organization is also participating in Grossman's and Beck's informal meetings but are frustrated that they appear to simply be responding to what he calls a list of items requested by the Ohio Society of CPAs and the Ohio Chamber of Commerce.

"We are on board with uniformity, we support the idea of uniformity. But it has to be balanced," Scarrett said. "You can't just take the CPA wish list that they have had for 20 years and try to implement it and think that our communities will be OK with it. Because they're not."

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The major proposals being considered for Grossman's bill that concern the municipal league the most, Scarrett said, are:

• A rule that would allow businesses with a negative net operating loss from one year to the next to avoid paying local income tax for up to five years. Many municipalities already have a rule varying from one to 10 years, but about 150 cities and villages do not, which means a rule like this would cost them money.

• State law allows a business to work in a particular municipality for up to 12 days without having to pay income tax.Grossman's proposal could raise that number to 30 days.

• A stipulation that income could only be taxed in the jurisdiction where the work is performed and not where the person lives. This applies when, for example, a person works in Cleveland but lives in a suburb.

• A proposal requiring that any future changes to municipal income tax rules and definitions be submitted through the state tax commissioner and then to a state rules making process. Scarrett said that would all but assure a complete loss of local control.

"That is a big concern with our people that the state tax commissioner would be the overlord, the final say and governing person over all municipal tax operation," he said.

Tax commissioner Testa admitted that any measure attempting to change the municipal income tax code is going to be laborious, and could produce a set of winners and losers on the outset. But the long-term benefits make this worth talking about, he said.

"There is going to have to be some compromising," Testa said. "Some will have to cave in and try to meet some middle ground. Maybe some give up one thing, some give up something else. All that negotiating has to take place."

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